ACCTG 312n
Accounting for Production Losses
QUIZ
October 13, 2021
COMPUTATIONS. Give what are asked in each case that follow. Show your computations. Label and properly identify
(encircle or box) your final answer. Make a clean, clear, and coherent record of your solutions.
45 points
SET A
NO. 1
Jacinto Company produces plastic pipes to customer specifications. Losses of less than 5 percent are considered
normal because they are inherent in the production process. The company applies overhead to products using machine hours.
Jacinto Company used the following information in setting its predetermined OH for 2020:
Expected overhead other than rework
₱870,000
Expected rework costs
85,000
Total expected overhead
₱955,000
Expected machine hours for 2020
10,000
During 2020, the following production and cost data were accumulated:
Total completed production
200,000 feet of pipe
Total defects
4,000 feet of pipe
Ending inventory
7,500 feet of pipe
Total material cost for Job V316
₱ 774,200
Total cost of direct labor for Job V316
₱ 241,700
Total machine hours for Job V316
3,080
Cost of reworking defects during 2020
₱ 75,500
Total actual overhead cost for 2020
₱ 862,000
Required: 15 points
a) Determine the overhead application rate for 2020. ₱95.50 per MH
b) Determine the cost of Job V316 in 2020. ₱1,310,040
c) Assume that the rework is normal and those units can be sold for the regular selling price. How will Jacinto
Company account for the ₱75,500 rework cost? charged to FOH Control
d) Assume that Jacinto Company does not include rework cost in developing the overhead application rate because
rework is related to specific job, determine the cost of Job V316. ₱1,283,860
e) Using the information in letter (d), assume that 20 percent of the rework cost was specifically related to 200 feet
of pipe for Job V316. The reworked pipe can be sold for ₱625 per foot. What is the total cost of Job V316?
₱1,173,960
a)
FOH rate = ₱955,000 / 10,000 MHs = ₱95.50 per MH
b) Direct materials
Direct labor
FOH applied (₱95.50 x 3,080 MHs)
Cost of Job V316
c)
₱ 774,200
241,700
294,140
₱1,310,040
d) Direct materials
Direct labor
FOH Applied
(₱870T/10T x 3,080 MHs)
Cost of Job V316
₱ 774,200
241,700
267,960
₱1,283,860
The cost of rework will be charged to FOH Control, since it is normal.
e).. Cost of Job V316 in letter (d)
Cost of rework charged to Job V316 (₱75,500 x 20%)
Sales value of the rework (₱625 x 200 ft.)
Cost of Job V316
₱1,283,860
15,100
( 125,000 )
₱1,173,960
NO. 2 Jacinto Company manufactures one of its products in a two-department process. A separate Work in Process Inventory
account is maintained for each department, and the company uses a first-in, first-out process costing system. The first
department is Molding; the second is Grinding. At the end of production in Grinding, a quality inspection is made and then
packaging is added. Production and cost data for the Grinding Department for September 2020 follow:
Production data:
WIP, beginning Inventory (0% complete as to material; 30% as to labor;
40% as to overhead)
1,000 units
Transferred-in from the Molding Department
50,800 units
Normal spoilage (found at the end of processing during quality control)
650 units
Abnormal spoilage (found at the end of processing during quality control)
350 units
WIP, end Inventory (0% complete as to material; 40% as to labor;
65% as to overhead)
1,800 units
Cost data:
Transferred-in
Material (label and package)
Direct labor
Overhead
WIP, beginning
₱
6,050
0
350
980
Currently added
₱154,940
13,440
22,689
55,627
Determine the following: 21 points
a) Compute the total cost per equivalent unit for the fully completed product. ₱4.88
b) Compute the total production cost that will be associated with the following items:
b1. Normal spoilage ₱2,990
b2. Abnormal spoilage ₱1,610
b3. Good units completed in the Grinding Department ₱245,365
b4. Ending Work in Process in the Grinding Department ₱7,101
c) Journal entry to record the transfer of cost of production out of the Grinding Department.
d) If Jacinto Company charges 100% markup on its production cost, how much is the average unit selling price of
the completed units? ₱10.01…per unit
Quantity Schedule
FIFO
Material
WD
EUP
Labor
WD
EUP
WIP, beginning
Units transferred-in
Total units to be accounted for
Actual
1,000
50,800
51,800
WIP, beginning
Completed & transferred
WIP, end
Normal loss
Abnormal loss
Total units as accounted for
1,000
48,000 100% 48,000
1,800
650
350
51,800
48,000
70%
700
100% 48,000
40%
720
100%
650
100%
350
50,420
Total
₱ 7,380
EUP
Unit cost
₱154,940
13,440
22,689
55,627
₱254,076
50,800
48,000
50,420
50,570
Overhead
WD
EUP
40%
100%
65%
100%
100%
Costs charged to the department:
WIP, beginning
Added this period:
Transferred-in
Material
Labor
Overhead
Total costs to be accounted for
₱3.05
0.28
0.45
1.10
₱4.88
Costs accounted for as follows:
WIP, beginning:
Beginning balance
₱ 7,380
Added: Labor (700 x ₱0.45)
315
Overhead (400 x ₱1.10)
440
Share in the cost of NL (650 x ₱4.60 x 1,000/49,000)
61
Started & Completed (48,000 x ₱4.88)
Share in the cost of NL (650 x ₱4.60 x 48,000/49,000)
₱234,240
2,929
WIP, end: Transferred-in (1,800 x ₱3.05)
Labor (720 x ₱0.45)
Overhead (1,170 x ₱1.10)
₱5,490
324
1,287
FOH Control:
Transferred-in ( 350 x ₱3.05)
Labor & OH (350 X ₱1.55)
Total costs as accounted for
₱1,067.50
542.50
c)
Finished Goods Inventory
245,365
FOH Control
1,610
WIP Inventory – Grinding Department
d) Total cost of completed units
total units completed
unit cost
cost + markup
Selling price
₱245,365
/ 49,000 units
₱5.007….
x 200%
₱ 10.01… per unit
₱ 8,196
237,169
7,101
1,610
₱254,076
246,975
400
48,000
1,170
650
350
50,570
NO. 3 The following data has been taken from the Second department of Jacinto Company:
• Cost from proceeding department: ₱9,675
• Cost added by the department (Materials + Conversion): ₱6,500
• Units received from preceding department: 5,625
• Units transferred to finished goods store room: 5,000
• Units still in process (1/3 complete as to conversion costs): 375
• Units lost in process: 250
Based on the above data, determine: 9 points
a) The total units to be accounted for 5,625
b) The number of good units 5,375
c) The adjustment to unit cost for lost units in the Second Department ₱0.08
Using WA, as implied in the given:
Actual
Materials
Units received 5,625
Completed
WIP, end
Units lost
Total units
5,000
375
250
5,625
100%
100%
-
5,000
375
5,375
Conversion
100% 5,000
1/3
125
5,125
Transferred-in cost = ₱9,675 / 5,625 = ₱1.72 per unit
Units lost
x 250
Total transferred-in cost of lost units ₱430
Number of good units
/ 5,375
Adjustment for lost units
₱0.08
COMPUTATIONS. Give what are asked in each case that follow. Show your computations on yellow/white paper. Label
and properly identify (encircle or box) your final answer. Make a clean, clear, and coherent record of your solutions.
45 points
SET B
NO. 1 Jacinto Company manufactures one of its products in a two-department process. A separate Work in Process Inventory
account is maintained for each department, and the company uses a weighted average process costing system. The first
department is Molding; the second is Grinding. At the end of production in Grinding, a quality inspection is made and then
packaging is added. Production and cost data for the Grinding Department for September 2020 follow:
Production data:
WIP, beginning Inventory (0% complete as to material; 30% as to labor;
40% as to overhead)
1,000 units
Transferred-in from the Molding Department
50,800 units
Normal spoilage (found at the end of processing during quality control)
650 units
Abnormal spoilage (found at the end of processing during quality control)
350 units
WIP, end Inventory (0% complete as to material; 40% as to labor;
65% as to overhead)
1,800 units
Cost data:
Transferred-in
Material (label and package)
Direct labor
Overhead
WIP, beginning
₱
6,050
0
350
980
Currently added
₱149,350
12,250
22,474
50,190
Determine the following: 21 points
a) Compute the total cost per equivalent unit for the fully completed product. ₱4.70
b) Compute the total production cost that will be associated with the following items:
b1. Normal spoilage ₱2,892.50
b2. Abnormal spoilage ₱1,557.50
b3. Good units completed in the Grinding Department ₱233,192.50
b4. Ending Work in Process in the Grinding Department ₱6,894
c) Journal entry to record the transfer of cost of production out of the Grinding Department.
d) If Jacinto Company charges 100% markup on its production cost, how much is the unit selling price of the
completed units? P9.51 per unit
Quantity Schedule
WA
WIP, beginning
Units transferred-in
Total units to be accounted for
Actual
1,000
50,800
51,800
Completed & transferred
49,000
Material
WD
EUP
100% 49,000
Labor
WD
EUP
100% 49,000
Overhead
WD
EUP
100%
49,000
WIP, end
Normal loss
Abnormal loss
Total units as accounted for
1,800
650
350
51,800
-
49,000
40%
100%
100%
720
650
350
50,720
65%
100%
100%
1,170
650
350
51,170
Costs charged to the department:
Transferred-in
Material
Labor
Overhead
Total costs to be accounted for
Total
₱155,400
12,250
22,824
51,170
₱241,644
Costs accounted for as follows:
Completed & transferred (49,000 x ₱4.70)
Cost of the normal loss:
Transferred-in (650 x ₱3)
Labor (650 x ₱0.45)
Overhead (650 x ₱1)
EUP
51,800
49,000
50,720
51,170
Unit cost
₱3.00
0.25
0.45
1.00
₱4.70
₱230,300.00
₱1,950.00
292.50
650.00
2,892.50
WIP, end: Transferred-in (1,800 x ₱3)
Labor (720 x ₱0.45)
Overhead (1,170 x ₱1)
₱5,400.00
324.00
1,170.00
FOH Control:
Transferred-in ( 350 x ₱3)
Labor & OH (350 X ₱1.45)
Total costs as accounted for
₱1,050.00
507.50
c)
Finished Goods Inventory
233,192.50
FOH Control
1,557.50
WIP Inventory – Grinding Department
d) Total cost of completed units
total units completed
unit cost
cost + markup
Selling price
₱233,192.50
6,894.00
1,557.50
₱241,644.00
234,750
₱233,192.50
/ 49,000 units
₱4.7590….
x
200%
₱ 9.51… per unit
NO. 2 The following data has been taken from the Third department of Jacinto Company:
• Cost from proceeding department: ₱19,320
• Cost added by the department (Materials + Conversion): ₱13,000
• Units received from preceding department: 5,600
• Units transferred to finished goods store room: 5,000
• Units still in process (1/2 complete as to conversion costs): 350
• Units lost in process: 250
Based on the above data, determine:
a) The total units to be accounted for 5,600
b) The number of good units 5,350
c) The adjustment to unit cost for lost units in the Second Department ₱0.16
Using WA, as implied in the given:
Actual
Materials
Units received 5,600 good units 5,350
Completed
WIP, end
Units lost
Total units
5,000
350
250
5,600
100%
100%
-
5,000
350
5,350
Conversion
100% 5,000
1/2
175
5,175
Transferred-in cost = ₱19,320 / 5,600 = ₱3.45 per unit
Units lost
x 250
Total transferred-in cost of lost units
₱862.50
Number of good units
/ 5,350
Adjustment for lost units
₱0.16…
NO. 3
Jacinto Company produces plastic pipes to customer specifications. Losses of less than 5 percent are considered
normal because they are inherent in the production process. The company applies overhead to products using machine hours.
Jacinto Company used the following information in setting its predetermined OH for 2020:
Expected overhead other than rework
₱880,000
Expected rework costs
Total expected overhead
Expected machine hours for 2020
75,000
₱955,000
10,000
During 2020, the following production and cost data were accumulated:
Total completed production
200,000 feet of pipe
Total defects
5,000 feet of pipe
Ending inventory
8,500 feet of pipe
Total material cost for Job V316
₱ 772,400
Total cost of direct labor for Job V316
₱ 214,700
Total machine hours for Job V316
3,050
Cost of reworking defects during 2020
₱ 75,500
Total actual overhead cost for 2020
₱ 862,000
Required:
a) Determine the overhead application rate for 2020.
b) Determine the cost of Job V316 in 2020.
c) Assume that the rework is not normal due to a change in the specification by the customer. How will Jacinto
Company account for the ₱75,500 rework cost?
d) Assume that Jacinto Company does not include rework cost in developing the overhead application rate because
rework is related to specific job, determine the cost of Job V316.
e) Using the information in letter (d), assume that 20 percent of the rework cost was specifically related to 200 feet
of pipe for Job V316. And Jacinto Company sets its price at 150% of total production cost, how much is the total
amount to be billed for Job V316?
a)
FOH rate = ₱955,000 / 10,000 MHs = ₱95.50 per MH
b) Direct materials
Direct labor
FOH applied (₱95.50 x 3,050 MHs)
Cost of Job V316
₱ 772,400
214,700
291,275
₱1,278,375
d) Direct materials
Direct labor
FOH Applied
(₱880T/10T x 3,050 MHs)
Cost of Job V316
₱ 772,400
214,700
268,400
₱1,255,500
c) The cost of rework will be charged to Job V316, because it’s due to the customer’s change in specification.
e).. Cost of Job V316 in letter (d)
₱1,255,500
Cost of rework charged to Job V316 (₱75,500 x 20%)
15,100
Cost of Job V316
₱1,270,600
Rate of the selling price
x
150%
Amount to be billed for Job V316
₱1,905,900
. . . END . . .
One night four college kids stayed out late, partying and having a good time. They paid no mind about the
final exam they had the next day for which they didn’t study. In the morning though panic took over and they
hatched a plan to get out of taking the exam. They covered themselves with grease and dirt and went to the
Dean’s office. Once there, they said they had been to a wedding the previous night and on the way back they
got a flat tire and had to push the car back to campus so they couldn’t make it on time for the exam and they
hoped they would get another chance at taking it some other day.
The Dean listened to their story without saying a word. When the students finished telling their story he
offered them a chance to take the test three days later.
They thanked him and accepted his offer. And for the next three days, the four students studied without
unnecessary breaks. They studied as hard as never before, only taking breaks to eat and sleep. Finally, after
three days the four students were confident they knew everything and that nothing could surprise them.
They walked into the Deans office confident and determined they will ace the exam.
The Dean welcomed them and told them they will have to take the exam in separate rooms and that they
would have to leave all of their things in a special locker in his office since there are no professors to watch
over them. They were fine with that since they had all studied hard. Finally, each one of them sat in his own
classroom with a pen and exam waiting for them on the table. Everything was fine until they saw the exam
which had only two questions:
• Your Name __________ (1 Point)
• Which tire burst? (99 Points)
a. Front Left
b. Front Right
c. Back Left
d. Back Right